1986 (8) TMI 285 - AT - Customs

Issues Involved:
1. Validity of the import of Polyester Filament Yarn under Public Notice No. 67/77 dated 2-9-1977.
2. Allegations of manipulation in the date of the Letter of Credit (L/C).
3. Interpretation and application of the "firm commitment by way of irrevocable letters of credit" clause.
4. Publication and effective date of Public Notice No. 67/77.
5. Imposition of fines and penalties.

Issue-wise Detailed Analysis:

1. Validity of the import of Polyester Filament Yarn under Public Notice No. 67/77 dated 2-9-1977:
The appellants imported various consignments of Polyester Filament Yarn and sought clearance under their import licenses. The Collector of Customs objected to the clearance on the grounds that the Letter of Credit (L/C) No. 23/549 dated 1-9-1977, actually opened on 5-9-1977, was not valid under the amended import policy which canalized the import of Polyester Filament Yarn through the State Trading Corporation of India as per Public Notice No. 67/77 dated 2-9-1977. The Collector treated the consignments as unauthorized imports and took penal action against the importers.

2. Allegations of manipulation in the date of the Letter of Credit (L/C):
The Collector initially alleged manipulation in the date of the L/C but later dropped this charge. The Collector's findings indicated that the L/C was issued on 5-9-1977, although it was dated 1-9-1977. The Collector concluded that there was no firm commitment prior to 2-9-1977 as stipulated by the Public Notice No. 67/77.

3. Interpretation and application of the "firm commitment by way of irrevocable letters of credit" clause:
The appellants argued that the L/C dated 1-9-1977 constituted a firm commitment before the issuance of Public Notice No. 67/77 on 2-9-1977. The Tribunal examined whether the commitment by the bank on 1-9-1977, despite the L/C being issued on 5-9-1977, fulfilled the requirement of a firm commitment. The Tribunal found that the application for the L/C was made and accepted on 1-9-1977, and the commitment by the bank was communicated to the foreign supplier's agent, thereby constituting a firm commitment by way of an irrevocable letter of credit.

4. Publication and effective date of Public Notice No. 67/77:
The appellants contended that Public Notice No. 67/77, although dated 2-9-1977, was published and made available to the public only on 9-9-1977. The Tribunal considered the letter from the Controller of Publications, which stated that the Gazette containing the Public Notice was made available to the public on 9-9-1977. The Tribunal held that the Public Notice should be effective from 9-9-1977, as the appellants could not have known about the change in policy before that date.

5. Imposition of fines and penalties:
The Tribunal found that the imports were not in deliberate violation of the ITC regulations, as the appellants had made a firm commitment by opening the L/C on 1-9-1977. The fines and penalties imposed by the Collector were deemed harsh and unwarranted. The Tribunal set aside the orders of fines and penalties, directing that the amounts, if paid, be refunded to the appellants.

Separate Judgments:
The case was decided by three members of the Tribunal. Member (Technical) K.S. Dilipsinhji and Member (Judicial) K. Gopal Hegde had differing opinions. The third member, M. Gouri Shankar Murthy, was brought in to resolve the differences. The majority opinion, which included the views of Members Hegde and Murthy, favored the appellants, resulting in the setting aside of the Collector's orders and the refund of fines and penalties.

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